What's Going On with Santa Clarita's Real Estate Market?
November, 2004 - Issue #2
About six months ago, a local real estate agent knocked on my door to give me some news: "I know of three couples that want to buy your house," she said. "There will be a bidding war, which will only work to your advantage because it will drive your sale price up even higher. We'll have all the paperwork done and the money in your hands in a couple of weeks. How does that sound?" Well, it sounded great, except for one minor problem - I had no intention of selling my home and this agent was only one out of the many who regularly visited my Valencia neighborhood with promises of fast sales and huge profits.

How quickly things change. In early July of this year, the inventory of homes for sale in Santa Clarita nearly tripled, causing a swap in supply versus demand. According to Jon Flaig, a realtor with Realty Associates, the sense of urgency on the part of buyers dissipated when it became clear that there was now a lot more to choose from. "There was a state of 'panic sell' because people realized that this was probably the top of the market - they wanted to cash out now and move or store the profit for retirement. A lot of people put their house on the market and spiked the inventory, causing prices to drop."

The change has caused a conversion to a buyer's market, ending the three-year reign of power for sellers. The average days on market is starting to increase, which is normal as it gets closer to the holidays, but gone are the times when homeowners bragged about selling their home for more than asking price on the first day it listed. At the end of September, statistics showed that it's taking 73 days to sell a house - more than double what it was last year at this time.

While the time it takes to sell a home in Santa Clarita has been altered, listing prices for single-family homes have yet to catch on. "The average asking price is still very high. As of late September, the average list price for a home here is $609,700, but the average sale is $549,800," says Flaig.

"The bid wars are done with," observes Pam Ingram, a realtor associate with Keller Williams VIP Properties. "Sellers need to be realistic about price - they won't be getting more than what the last house sold for in their neighborhood, but people are still making a lot of profit off of their homes." Flaig agrees. "The SCV housing market is still phenomenal - we have one of the most aggressive markets in California. Our population is growing because our family atmosphere is still creating demand."

While predictions on how low sale prices will drop over the long-run range from 5 percent to 20 percent depending on the source, Ingram remains optimistic. "I don't think the market will drop 20 percent - it's probably closer to 5 percent or 10 percent. I think the SCV has the advantage of new growth of homes, good schools and a safe community on our side."

"While more homes have become available, the inventory is still less than what would be considered a normal market," states Flaig. "Still, sellers should avoid holding firm on an overly inflated price they could have got four months ago." And because competition is more steep, how the home "shows" is now becoming more important, too.

"Nice paint, new, clean carpet, upgraded kitchen and bathrooms - these are things that women tend to look at that can increase the value of your home. Just don't put frivolous money into a house - you want to get back dollar for dollar what you spend making it ready for sale," advises Ingram.

A house that is landscaped nicely and showing well is selling faster, but will still get offers that are less than asking price. "Uniqueness can make all the difference. If the kitchen is unbelievable, or there's something special about the backyard, a home can sell in a few weeks. The bread and butter houses are the ones that are taking the regular time to sell," says Flaig.

So what does the future hold for the Santa Clarita real estate market? Did those of us that chose not to sell during the boom miss our big chance? "The housing market is kind of like a roller coaster," says Ingram. "I don't' think this is the highest these houses will go in the next five to 10 years, barring any huge catastrophe. The recovery could take a couple of years, but shouldn't be like the real estate crash of the late '80s and early '90s. Slowdowns are normal while the market corrects itself."
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